Project Summary Children's hospitals (CH) provide high volume, specialized, and resource intense care to the sickest children who often require highly-trained care providers and cutting edge technology. Though CH comprise less than 5% of all hospitals in the U.S., they account for 40% of pediatric inpatient days and 50% of national pediatric healthcare costs. In the era of high consumer demand for healthcare at specialized centers, there is compelling health utilization cost data suggesting that the cost of common and routine procedures and care at CH, not just highly specialized care, is greater at CH than at non-children's hospitals (NCH). Research by our team has demonstrated that costs are higher at CH compared to NCH for several commonly performed surgical procedures including appendectomy and pyloromyotomy. Although outcomes for highly specialized surgical care have been shown to be superior at CH, outcomes at CH and NCH are similar for many commonly performed surgical procedures. Further study is warranted to determine the economic factors that are driving higher costs at CH. Prior research has been limited by the use of costs derived from hospital level charges. Since true costs or expenses are not available, the next best option is to use payments as provided by private insurance carriers. The Health Care Cost Institute (HCCI) was established in 2011 to help complete the picture on actual health care spending by bringing together payment data from four of the nation's largest insurance carriers. This health services research proposal will be the first to systematically examine CH and NCH using data on actual payments for 25% of privately insured children in the U.S using HCCI data. We have identified 11 common surgical procedures that are performed at CH and NCH across the U.S. We aim to directly assess the value of children's surgical care by testing for any quality or price differentials among CH and NCH for these procedures. We will then examine the sources of any such differentials, with particular interest in the role of hospital market structure and competition on quality and payment differentials. We have assembled a team of experts including a content expert in children's surgical care with experience in risk-adjusted hospital-level outcome comparison (Raval), a methodologic expert in measurement and evaluation of competition in healthcare markets (McCarthy), and a healthcare administrator with expertise in healthcare costs, quality, and access as well as healthcare delivery innovation (Sanfilippo). Our overall goal is to accumulate evidence to inform policy and reimbursement implications for newly forming pediatric accountable care organizations focused on a ?pediatric differential? where higher costs are justified by improved outcomes. To our knowledge, this will be the first project to directly assess the value of children's surgical care using payment data. Our results will inform patients, physicians, hospitals, and payers by encouraging pricing transparency and cultivating a high quality, value-centric healthcare system for children in the US.